Bill Barring Noncompetes for Low-Wage Workers Introduced

By Roy Maurer Jun 5, 2015
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Legislation introduced June 3, 2015, would prohibit employers from requiring employees to sign noncompete agreements if they make less than $15 an hour, $31,200 per year or the minimum wage in the worker’s local area.

The Mobility and Opportunity for Vulnerable Employees (MOVE) Act was introduced by Senators Chris Murphy, D-Conn., and Al Franken, D-Minn.

The bill also calls for all employers to notify applicants at the beginning of the hiring process if they may be required to sign a noncompete agreement.

Murphy said at a press conference unveiling the bill that its aim is to assure that lower-wage workers can freely move to jobs that pay better.

“If workers can’t go to a competitor for a promised higher wage, then the market fluidity, the labor fluidity that creates upward pressure on wages disappears. If workers are locked into jobs because of noncompete clauses, then there is no reason for companies to raise their wages,” he said.

Typically, noncompete contracts are part of the hiring process for white-collar employees privy to a company’s trade secrets. A May 2015 study conducted by economists at the University of Illinois and University of Michigan found that one-fourth of workers have signed a noncompete agreement at some point in their career and 12.3 percent of workers are currently bound by one. Noncompetes were mostly reported by those with a college undergraduate education or above (20 percent), but the researchers also found that about 10 percent of workers who make less than $40,000 a year are bound by the contracts.

Murphy said the legislation was propelled by media reports that warehouse workers at Amazon and sandwich makers at Jimmy John’s were required to sign noncompete agreements as a condition of employment. SHRM Online reported in October 2014 that the Jimmy John’s contract probably isn’t widely enforceable.

Amazon changed its hiring practice in March 2015 after the requirement was made public.

Roy Maurer is an online editor/manager for SHRM.

Follow him @SHRMRoy

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